Protect the Federal-State-Local Partnership for Medicaid

Action Needed

Urge your members of Congress to support the federal-state-local partnership structure for financing and delivering Medicaid services and to oppose any measure that would further shift federal and state Medicaid costs to counties – including cuts, caps, block grants and new limits on counties’ ability to raise the non-federal match or receive supplemental payments.

Background

Medicaid is a federal entitlement program administered by states, with assistance from counties, that provides health and long-term care insurance to over 84 million low-income families and individuals, or nearly one in four Americans. Authorized under the Social Security Act, Medicaid is jointly financed by federal, state and local governments, including counties. For FY 2021, states and local governments contributed to over a third of the $728 billion in total Medicaid expenditures. During the Great Recession, contributions to the non-federal share increased by 21 percent as more than 10 million additional people enrolled in Medicaid. Likewise, during the COVID-19 pandemic, enrollment in Medicaid increased by nearly 20 percent, effectively raising contributions to the program by counties and other local governments.

Counties diligently protect the health of our 314 million residents with an annual investment of over $80 billion in community health. Through over 900 county-supported hospitals, 680 county-owned and supported long-term care facilities, 750 county behavioral health authorities and 1,943 local public health departments, counties deliver health services, including to those that are eligible for Medicaid reimbursement.

Counties may contribute up to 60 percent of the share of Medicaid costs that are not covered by the federal government in each state (also called the non-federal share) and counties contribute to Medicaid in 25 states. Of these, 19 mandate counties to contribute to the non-federal share of Medicaid costs and/or the administrative, program, physical health and behavioral health costs.

Likewise, Medicaid boosts local economies by enhancing healthcare access for low-income residents, improving their health and productivity. It also cuts counties’ costs for uncompensated care and helps retain healthcare professionals in rural areas through patient revenue. 

In the 115th Congress, Medicaid faced a potential federal funding cut of $800 billion over a decade. Despite these unsuccessful efforts, they paved the way for changes like per capita caps and block grants, shifting costs to counties and reducing their service capacity. In 2018, the Trump Administration supported state efforts to implement Medicaid work requirements and other regulatory changes, including block grants for certain populations. State work requirement waivers were revoked starting in 2021 under the Biden Administration, however future administrations could reintroduce these waivers, potentially increasing counties’ administrative burden and uncompensated care costs.

Although the COVID-19 Public Health Emergency officially ended in May 2023, continuous enrollment under Medicaid concluded in March, after being decoupled from the Public Health Emergency because of the Consolidated Appropriations Act of 2023. This Congressional action triggered a 12-month unwinding period, ending in early 2024. During this time, states have worked to redetermine eligibility for all enrollees and discontinue coverage for individuals who are either no longer eligible or who, despite remaining eligible, are unable to complete the renewal process. While this policy change affects local governments and their residents in all of America’s 3,069 counties, counties in nine states—California, Colorado, Minnesota, South Carolina, North Carolina, North Dakota, Ohio, South Carolina and Virginia—face an unprecedented task of managing the unwinding as they have sole responsibility for the Medicaid eligibility and renewal process. 

Key Talking Points

• Medicaid is already a lean program. Medicaid’s average cost per beneficiary is significantly lower than private insurance, even with its comprehensive benefits and lower cost-sharing. Counties have made the most of Medicaid’s flexibility by leveraging local funds to construct systems of care for populations that private insurance does not cover. New limits on counties’ ability to receive supplemental payments or raise the non-federal match (e.g., through intergovernmental transfers or certified public expenditures) would compromise the stability of the local health care safety net.
• Imposing spending caps on Medicaid will not address the underlying drivers of the program’s costs. Caps do not account for long-term trends like the aging population and rising health care costs that are projected to drive higher federal entitlement spending in the coming years. Complying with a cap designed to significantly reduce the deficit would require major cuts to the federal contribution. States and ultimately counties would absorb this cost shift.
• Implementing a Medicaid per capita cap or block grant would not reform Medicaid but would merely shift expenses to state and county taxpayers. Previous legislative proposals would have cut approximately $800 billion in federal funding for Medicaid over the next ten years. States would be forced to increase health care spending beyond their capacity, resulting in decreased access to care for beneficiaries. This would shift costs to county taxpayers and reduce counties’ capacity to provide health care services – including those mandated by state laws.

For further information, contact Blaire Bryant at 202.942.4246 or bbryant@naco.org.